ACCC puts comparison sites and their suppliers on notice

Comparison sites are on notice that the consumer watchdog is on the lookout for operators that fail to disclose their commercial relationships, disguise sponsored product recommendations and otherwise mislead consumers.

The Australian Competition and Consumer Commission has issued a guide for comparison site operators and their suppliers, highlighting a number of areas where the industry may be engaging in misleading or deceptive conduct.

"Where an operator makes representations about their impartiality and independence but then produces search results based on preferential relationships with suppliers, it is likely that the representations will be false or misleading in contravention of the Australian Consumer Law," the ACCC said.

Last year the ACCC reviewed the comparison site industry, highlighting its value to consumers and businesses by facilitating greater competition, choice, convenience and quality.

However, it said it was concerned that poor conduct by some industry participants was undermining these benefits.

The guide, which is a follow-up to last year's review, is based on three principles: that comparison sites facilitate honest like-for-like comparisons; that they are transparent about commercial relationships; and that they clearly disclose who and what is being compared.

To promote like-for-like comparisons, operators should disclose what they mean by a value ranking, display any assumptions used when displaying search results, have systems in place to ensure accuracy and ensure that suppliers are providing timely information.

On the issue of transparency, the ACCC said operators should clearly differentiate between sponsored or advertised products and "organic" search results. They should not allow suppliers to pay them a fee or some other benefit in exchange for preferred treatment in search results.

Operators should disclose any commercial relationships even when those relationships do not affect the comparison results.

Operators should disclose the identity of suppliers whose products are being compared, as well as the product range of each supplier.

The ACCC said: "Some operators use a business model where all or the majority of suppliers compared are owned or controlled by an entity that also owns or controls the comparison site. Other operators may own a stake in some of the suppliers who products they compare.

"Failure to make adequate disclosure of such relationships is likely to be misleading."

The ACCC also said comparison algorithms must be constructed fairly. In one example, operators may leave out references to the consumer's current supplier, even where it meets the consumer's needs, to encourage switching.

Operators should also make accurate disclosures of the proportion of the products in the market being compared.